Behavioral Economics and Petty Trading in Nigeria: Where to Sell and the Thoughts That Decide

Abstract

Behavioral economics proves that people often make economic decisions based on certain biases and heuristics. This paper studies the relativity bias, the status quo bias, the availability bias, and their influence in petty trading. It shows how these biases determine the location in which petty traders trade and how their decision to trade in these areas affects their sales. Previous research on petty traders, behavioral economics, and these biases is analyzed and applied in context. The findings reveal that many petty traders rely on the aforementioned biases to choose locations to trade; at times, their choices affect their sales negatively. Since sufficient information can mitigate these biases, this paper recommends a social platform be created for petty traders to share information. It also notes that an awareness of the biases and a responsive change of behavior is a big step in effectively countering these biases.